What next for Microsoft?

To borrow the phrase actor Yul Brynner used when wrestling with concepts of western culture in The King and I, the Microsoft case “is a puzzlement.” Two federal courts have now handed down their rulings that the company illegally protected its Windows monopoly. However, the U.S. Court of Appeals spanked District Court Judge Thomas Penfield Jackson for talking too much to the press - and threw out his order that the company be split.

Antitrust law is readily applied in dealing with such products as shoes, cement, and telephone systems where legal infractions are easier to discern. However, Microsoft's Windows system, which dominates the world of cyberspace, is an odd mixture of physical product, brain work by computer wizards, and corporate arrogance.

It was that arrogance that drove Judge Jackson up the wall, to the point where he unwisely discussed the case with reporters. It also caused arbitrator Richard Posner, an expert on antitrust law, to throw up his hands in despair, and left unanswered the basic question of whether Microsoft in the long run might find itself holding an empty bag anyway.

Bill Gates commented after the decision that “it's a good time to sit down and see what kind of resolution could be worked out.” Perhaps so. Microsoft has now agreed to allow icons of rival services to be featured on its Windows array, something it should not have taken a complex antitrust suit to bring about. As rival companies offer new services to computer users, will they, too, have to beat Mr. Gates and crew over the head to get access to Windows, which clearly has the market power to be called monopolistic?

Although the appeals court was clearly displeased with the trial judge, it left intact his factual findings of monopolistic behavior, which could be the basis for follow-on suits in which treble damages are awarded. Nor did the appeals court accept Microsoft's contention that the fast pace of technological change makes antitrust questions moot.

Many consumers like the idea of one standard. However, Microsoft is not above the law and should not be allowed to continue practices that drive competitors out of the market.

The Bush administration might well have not brought the suit. However, it should not interfere with the Justice Department's future handling of the case. In any case the states that are co-plaintiffs have enough leverage to keep the antitrust boilers hot.

The important point to remember is that monopoly power is the antithesis of competitive improvements in any industry. Viable competitors would keep Microsoft on its toes, keep prices to consumers lower, and keep the American computer industry from losing its leading edge in global commerce.